Funding of €170 million from the European Investment Bank (EIB) is helping with the development of a central section of the A7 motorway in Germany.

It is the country’s first major works to be financed through the EIB’s project bond credit enhancement (PBCE) initiative, which has been forecast to improve the risk profile for capital investors in the road improvement scheme.

Being carried out by a consortium led by Hochtief, the work costing €600 million in upgrading the main link road between Germany and Denmark has been identified as a means of tackling congestion issues and is scheduled to be completed by 2018.

The public-private partnership project (PPP), which includes federal government partner, Deges, will focus on a 65km section between the Bordesholm junction in Schleswig-Holstein and the Hamburg Nordwest junction. This route will be widened from four to six lanes and over a 500m long stretch to eight lanes. It will also involve enhancement of 49 bridges within the area.

EIB vice president, Wilhelm Molterer, welcomed the project, which he believed would have strong economic benefit through improving journey times. It includes an initial loan of around €90 million towards its completion.

He said, “To make Europe’s infrastructure competitive, investments of a scale that cannot be effected by the public sector alone, are required. The repeated successful implementation of the principle of public/private partnerships in motorway construction in Germany guarantees the competitive integration of the construction industry and financing banks.

“By optimising the financing cost, the EIB has always played an important role in PPP projects. However, the A7 is unique in this respect insofar as the project company can finance itself directly on the capital markets with the support of the EU project bond initiative.”

As part of the Trans-European road Network (TEN-T), the A7 has been designated as one of the pilot projects for credit enhancement under the EU’s 2020 project bond initiative. This joint initiative from the EIB and the European Commission is aimed at achieving capital market financing via project bonds used specifically in support of specific road, energy, or ICT broadband projects.

Nikolaus Graf von Matuschka, a member of the executive board of Hochtief, said, “We are delighted that the federal government has once again entered into a public-private partnership with us in the area of highways construction. It is also confirmation that we did and continue to do good work on our two ‘A’ models, the A4 in Thuringia and the A8 in Baden-Wurttemberg and Bavaria.”

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